Van Eck Associates Corporation, et al.; Notice of Application, 56811-56813 [E7-19630]
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Federal Register / Vol. 72, No. 192 / Thursday, October 4, 2007 / Notices
Subadviser Group with respect to a
Non-Affiliated Underlying Fund for
which the Subadviser or a person
controlling, controlled by, or under
common control with the Subadviser,
acts as the investment adviser within
the meaning section 2(a)(20)(A) of the
Act (in the case of a Non-Affiliated
Investment Company) or as the sponsor
(in the case of a Non-Affiliated Trust).
2. No Fund of Funds or Fund Affiliate
will cause any existing or potential
investment by the Fund of Funds in a
Non-Affiliated Underlying Fund to
influence the terms of any services or
transactions between the Fund of Funds
or a Fund Affiliate and the NonAffiliated Underlying Fund or a NonAffiliated Fund Affiliate.
3. The Board of the Fund of Funds,
including a majority of the Independent
Trustees, will adopt procedures
reasonably designed to assure that the
Adviser and any Subadviser are
conducting the investment program of
the Fund of Funds without taking into
account any consideration received by
the Fund of Funds or a Fund Affiliate
from a Non-Affiliated Underlying Fund
or a Non-Affiliated Fund Affiliate in
connection with any services or
transactions.
4. Once an investment by a Fund of
Funds in the securities of a NonAffiliated Investment Company exceeds
the limit in section 12(d)(1)(A)(i) of the
Act, the board of directors or trustees of
the Non-Affiliated Investment
Company, including a majority of the
independent directors or trustees, will
determine that any consideration paid
by the Non-Affiliated Investment
Company to the Fund of Funds or a
Fund Affiliate Service Provider in
connection with any services or
transactions: (a) Is fair and reasonable in
relation to the nature and quality of the
services and benefits received by the
Non-Affiliated Investment Company; (b)
is within the range of consideration that
the Non-Affiliated Investment Company
would be required to pay to another
unaffiliated entity in connection with
the same services or transactions; and
(c) does not involve overreaching on the
part of any person concerned. This
condition does not apply with respect to
any services or transactions between a
Non-Affiliated Investment Company
and its investment adviser(s), or any
person controlling, controlled by, or
under common control with such
investment adviser(s).
5. No Non-Affiliated Underlying Fund
will purchase a security in any
Affiliated Underwriting.
6. Before investing in a Non-Affiliated
Investment Company in excess of the
limit in section 12(d)(1)(A)(i) of the Act,
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the Fund of Funds and the NonAffiliated Investment Company will
execute a Participation Agreement
stating, without limitation, that their
boards of directors or trustees and their
investment advisers understand the
terms and conditions of the order and
agree to fulfill their responsibilities
under the order. At the time of its
investment in shares of a Non-Affiliated
Investment Company in excess of the
limit in section 12(d)(1)(A)(i), the Fund
of Funds will notify the Non-Affiliated
Investment Company of the investment.
At such time, the Fund of Funds will
also transmit to the Non-Affiliated
Investment Company a list of the names
of each Fund Affiliate Service Provider.
The Fund of Funds will notify the NonAffiliated Investment Company of any
changes to the list of names as soon as
reasonably practicable after a change
occurs. The Non-Affiliated Investment
Company and the Fund of Funds will
maintain and preserve a copy of the
order, the Participation Agreement, and
the list with any updated information
for the duration of the investment and
for a period of not less than six years
thereafter, the first two years in an
easily accessible place.
7. Before approving any advisory
contract under section 15 of the Act, the
Board of the Fund of Funds, including
a majority of the Independent Trustees,
will find that the advisory fees charged
under the advisory contract will be
based on services provided that will be
in addition to, rather than duplicative
of, services provided under the advisory
contract(s) of any Underlying Fund in
which the Fund of Funds may invest.
These findings and the basis upon
which they are made will be recorded
fully in the minute books of the
appropriate Fund of Funds.
8. The Adviser or Distributor will
waive fees otherwise payable to it by a
Fund of Funds in an amount at least
equal to any compensation (including
fees received pursuant to any plan
adopted by a Non-Affiliated Investment
Company under rule 12b–1 under the
Act) received from a Non-Affiliated
Underlying Fund by the Adviser, or an
affiliated person of the Adviser, other
than any advisory fees paid to the
Adviser or its affiliated person by the
Non-Affiliated Investment Company, in
connection with the investment by the
Fund of Funds in the Non-Affiliated
Underlying Fund. Any Subadviser will
waive fees otherwise payable to the
Subadviser, directly or indirectly, by the
Fund of Funds in an amount at least
equal to any compensation received
from a Non-Affiliated Underlying Fund
by the Subadviser, or an affiliated
person of the Subadviser, other than any
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56811
advisory fees paid to the Subadviser or
its affiliated person by the NonAffiliated Investment Company, in
connection with the investment by the
Fund of Funds in the Non-Affiliated
Underlying Fund made at the direction
of the Subadviser. In the event that the
Subadviser waives fees, the benefit of
the waiver will be passed through to the
Fund of Funds.
9. Any sales charges and/or service
fees (as defined in NASD Conduct Rule
2830) charged with respect to shares of
a Fund of Funds will not exceed the
limits applicable to a fund of funds set
forth in NASD Conduct Rule 2830.
10. No Underlying Fund will acquire
securities of any investment company or
company relying on section 3(c)(1) or
3(c)(7) of the Act in excess of the limits
contained in section 12(d)(1)(A) of the
Act, except to the extent that such
Underlying Fund: (a) Receives securities
of another investment company as a
dividend or as a result of a plan of
reorganization of a company (other than
a plan devised for the purpose of
evading section 12(d)(1) of the Act); or
(b) acquires (or is deemed to have
acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting such Underlying Fund to (i)
Acquire securities of one or more
affiliated investment companies for
short-term cash management purposes,
or (ii) engage in interfund borrowing
and lending transactions.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–19631 Filed 10–3–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–28007; 812–13426]
Van Eck Associates Corporation, et al.;
Notice of Application
September 28, 2007.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application to amend
a prior order under section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d), 22(e) and 24(d) of
the Act and rule 22c–1 under the Act,
under section 12(d)(1)(J) of the Act for
an exemption from sections 12(d)(1)(A)
and (B) of the Act, and under sections
6(c) and 17(b) of the Act for an
AGENCY:
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56812
Federal Register / Vol. 72, No. 192 / Thursday, October 4, 2007 / Notices
exemption from sections 17(a)(1) and
(a)(2) of the Act.
Applicants
request an order to amend a prior order
that permits: (a) Open-end management
investment companies, whose series are
based on equity securities indices
(‘‘Equity Funds’’), to issue shares of
limited redeemability (‘‘Shares’’); (b)
secondary market transactions in the
Shares of the Equity Funds to occur at
negotiated prices; (c) dealers to sell
Shares of Equity Funds to purchasers in
the secondary market unaccompanied
by a prospectus when prospectus
delivery is not required by the
Securities Act of 1933 (‘‘Securities
Act’’); (d) certain affiliated persons of
the Equity Funds to deposit securities
into, and receive securities from, the
Equity Funds in connection with the
purchase and redemption of
aggregations of Shares; (e) certain
registered management investment
companies and unit investment trusts
outside of the same group of investment
companies as the Equity Funds to
acquire Shares; and (f) under certain
circumstances, the Equity Funds that
track certain foreign equity securities
indices to pay redemption proceeds
more than seven days after the tender of
Shares (the ‘‘Prior Order’’).1 Applicants
seek to amend the Prior Order in order
to offer additional series based on fixed
income securities indices (the ‘‘New
Funds’’ and together with the Equity
Funds, the ‘‘Funds’’).
APPLICANTS: Van Eck Associates
Corporation (‘‘Adviser’’), Market Vectors
ETF Trust (‘‘Trust’’), and Van Eck
Securities Corporation (‘‘Distributor’’).
FILING DATES: The application was filed
on September 25, 2007, and amended
on September 28, 2007.
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
will be issued unless the Commission
orders a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on October 23, 2007, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
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SUMMARY OF APPLICATION:
1 Van
Eck Associates Corporation, et al.,
Investment Company Act Release Nos. 27283 (Apr.
7, 2006) (notice) and 27311 (May 2, 2006) (order),
subsequently amended by Van Eck Associates
Corporation, et al., Investment Company Act
Release Nos. 27694 (Jan. 31, 2007) (notice) and
27742 (Feb. 27, 2007) (order).
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Jkt 214001
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090. Applicants, 99 Park Avenue, 8th
Floor, New York, NY 10016.
FOR FURTHER INFORMATION CONTACT: Julia
Kim Gilmer, Branch Chief, or Michael
W. Mundt, Assistant Director, at (202)
551–6821 (Division of Investment
Management, Office of Investment
Company Regulation).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Branch,
100 F Street, NE., Washington, DC
20549–0102 (tel. 202–551–5850).
Applicants’ Representations
1. The Trust is an open-end
management investment company
registered under the Act and organized
as a Delaware statutory trust. The Trust
is organized as a series fund with
multiple series. The Adviser, an
investment adviser registered under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’), will serve as
investment adviser to the New Funds.
The Adviser may retain sub-advisers
(‘‘Sub-Advisers’’) to manage the assets
of a New Fund. Any Sub-Adviser will
be registered under the Advisers Act.
The Distributor, a broker-dealer
registered under the Securities
Exchange Act of 1934 (the ‘‘Exchange
Act’’), will serve as the principal
underwriter and distributor of each New
Fund’s Shares.
2. The Trust is currently permitted to
offer Funds based on equity securities
indices in reliance on the Prior Order.
Applicants seek to amend the Prior
Order to permit the Trust to offer the
New Funds that, except as described in
the application, would operate in a
manner identical to the Equity Funds
that are subject to the Prior Order.
3. Each New Fund will invest in
fixed-income securities (‘‘Portfolio
Securities’’) selected to correspond
generally to the price and yield
performance of a fixed income securities
index (‘‘Underlying Index’’).2 No entity
2 The New Funds identified in the application
would have as their Underlying Indexes: the
Lehman Brothers Short Managed Money Municipal
Index, Lehman Brothers Intermediate Managed
Money Municipal Index, Lehman Brothers Long
Managed Money Municipal Index, Lehman Brothers
Non-Investment Grade Municipal Index, Lehman
Brothers Managed Money Municipal California
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that creates, compiles, sponsors, or
maintains an Underlying Index is or
will be an affiliated person, as defined
in section 2(a)(3) of the Act, or an
affiliated person of an affiliated person,
of the Trust, the Adviser, any SubAdviser, the Distributor, or a promoter
of a New Fund.
4. The investment objective of each
New Fund will be to provide investment
results that correspond, before expenses,
generally to the price and yield
performance of the relevant Underlying
Index. The Adviser may fully replicate
a New Fund’s relevant Underlying
Index or use a representative sampling
strategy where the New Fund will seek
to hold a representative sample of the
component securities of the Underlying
Index.
5. Under the Prior Order, applicants
stated that each Equity Fund would
invest at least 95% of its total assets in
the component securities of its
underlying index and may invest up to
5% of its assets in money market
instruments, money market funds,
futures contracts, options, options on
futures contracts, swap contracts, cash
and cash equivalents as well as in stocks
not included in its underlying index but
which the Adviser believes will help the
Equity Fund track its underlying index.
Applicants seek to amend the Prior
Order to provide that each Fund
generally will invest at least 80% or
90% of its total assets, as disclosed in
the relevant prospectus, in the securities
that comprise the relevant Underlying
Index, and at times may invest up to
20% of its total assets in certain futures,
options, and swap contracts, cash and
cash equivalents, as well as securities
not included in its Underlying Index
which the Adviser believes will help the
Fund track its Underlying Index. At all
times, a New Fund will hold, in the
aggregate, at least 80% of its total assets
in component securities and
investments that have economic
characteristics that are substantially
identical to the economic characteristics
of the component securities of its
Underlying Index. Applicants expect
that each New Fund will have a tracking
error relative to the performance of its
respective Underlying Index of less than
5 percent.
6. Applicants state that the New
Funds will comply with the federal
securities laws in accepting a deposit of
a portfolio of securities designated by
the Adviser to correspond generally to
the price and yield of the New Fund’s
Underlying Index (‘‘Deposit
Index, and the Lehman Brothers Managed Money
Municipal New York Index.
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Federal Register / Vol. 72, No. 192 / Thursday, October 4, 2007 / Notices
Securities’’) 3 and satisfying
redemptions with portfolio securities of
the New Fund (‘‘Fund Securities’’),
including that the Deposit Securities
and Fund Securities are sold in
transactions that would be exempt from
registration under the Securities Act.4
The specified Deposit Securities and
Fund Securities generally will
correspond pro rata, to the extent
practicable, to the Portfolio Securities of
a New Fund.
7. Applicants state that the New
Funds will operate in a manner
identical to the operation of the existing
Funds in the Prior Order, except as
specifically noted by applicants (and
summarized in this notice). The New
Funds will comply with the terms and
provisions of the Prior Order except as
modified by this application. Applicants
agree that any amended order granting
the requested relief will be subject to the
same conditions as those imposed by
the Prior Order. Applicants believe that
the requested relief continues to meet
the necessary exemptive standards.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–19630 Filed 10–3–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28009; 812–13412]
Vanguard STAR Funds, et al.; Notice of
Application
September 28, 2007.
Securities and Exchange
Commission (‘‘Commission’’).
pwalker on PROD1PC71 with NOTICES
AGENCY:
3 Applicants state that a cash-in-lieu amount will
replace any ‘‘to-be-announced’’ (‘‘TBA’’) transaction
that is listed as a Deposit Security or Fund Security
of any New Fund. A TBA transaction is a method
of trading mortgage-backed securities where the
buyer and seller agree upon general trade
parameters such as agency, settlement date, par
amount and price. The actual pools delivered
generally are determined two days prior to the
settlement date. The amount of substituted cash in
the case of TBA transactions will be equivalent to
the value of the TBA transaction listed as a Deposit
Security or Fund Security.
4 In accepting Deposit Securities and satisfying
redemptions with Fund Securities that are
restricted securities eligible for resale pursuant to
rule 144A under the Securities Act, the New Funds
will comply with the conditions of rule 144A,
including in satisfying redemptions with such rule
144A eligible restricted Fund Securities. The
prospectus for a New Fund will also state that an
authorized participant that is not a ‘‘Qualified
Institutional Buyer’’ as defined in rule 144A under
the Securities Act, will not be able to receive, as
part of a redemption, restricted securities eligible
for resale under rule 144A.
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Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from rule 12d1–2(a) under the Act.
ACTION:
Applicants
request an order to permit funds of
funds relying on rule 12d1–2 under the
Act to invest in certain financial
instruments.
APPLICANTS: Vanguard STAR funds,
Vanguard Chester Funds, Vanguard
Trustees’ Equity Fund, Vanguard
Variable Insurance Funds (collectively,
the ‘‘Trusts’’), The Vanguard Group, Inc.
(‘‘VGI’’) and Vanguard Marketing
Corporation (‘‘VMC’’).
FILING DATES: The application was filed
on August 10, 2007, and amended on
September 24 and 28, 2007.
HEARING OR NOTIFICATION OF HEARING:
An order granting the application will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on October 23, 2007, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, Commission, 100
F Street, NE., Washington, DC 20549–
1090; Applicants, c/o Nathan M. Will,
The Vanguard Group, Inc., P.O. Box
2600, Valley Forge, PA 19482.
FOR FURTHER INFORMATION CONTACT:
Donna Tumminio, Law Clerk, at (202)
551–6826, or Michael W. Mundt,
Assistant Director, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
SUMMARY OF APPLICATION:
The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Branch,
100 F Street, NE., Washington, DC
20549–0104 (telephone (202) 551–8090).
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. The Trusts are Delaware statutory
trusts and are registered under the Act
as open-end management investment
companies. The Trusts offer separate
series (‘‘Funds’’) that may invest in
other registered investment companies
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56813
in reliance on section 12(d)(1)(G) of the
Act and rule 12d1–2 under the Act
(‘‘Underlying Funds’’). Applicants
propose that the Funds be permitted to
invest in futures contracts, options on
futures contracts, swap agreements,
derivatives, and other financial
instruments that may not be securities
within the meaning of section 2(a)(36) of
the Act (‘‘Other Investments’’), in
addition to Underlying Funds.1
2. VGI is a Pennsylvania corporation
that is wholly and jointly owned by
certain registered investment
companies. VGI is registered as an
investment adviser under the
Investment Advisers Act of 1940 and as
a transfer agent under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’).
VGI provides each of the Funds with
corporate management, administrative,
transfer agency, and, in some cases,
investment advisory services. VMC is a
registered broker-dealer under the
Exchange Act and is a wholly owned
subsidiary of VGI. VMC provides all
distribution and marketing services for
the Funds.
Applicants’ Legal Analysis
1. Section 12(d)(1)(A) of the Act
provides that no registered investment
company (‘‘acquiring company’’) may
acquire securities of another investment
company (‘‘acquired company’’) if such
securities represent more than 3% of the
acquired company’s outstanding voting
stock or more than 5% of the acquiring
company’s total assets, or if such
securities, together with the securities of
other investment companies, represent
more than 10% of the acquiring
company’s total assets. Section
12(d)(1)(B) of the Act provides that no
registered open-end investment
company may sell its securities to
another investment company if the sale
will cause the acquiring company to
own more than 3% of the acquired
company’s voting stock, or cause more
than 10% of the acquired company’s
voting stock to be owned by investment
companies.
2. Section 12(d)(1)(G) of the Act
provides that section 12(d)(1) will not
apply to securities of an acquired
company purchased by an acquiring
company if: (i) The acquiring company
and acquired company are part of the
1 Other Investments do not include shares of any
registered investment companies that are not part
of the ‘‘same group of investment companies,’’ as
defined in section 12(d)(1)(G)(ii) of the Act, as the
Trusts. Applicants request that the relief also apply
to any future Fund, whether organized as an
investment company or as a series thereof, which
is advised by VGI or any entity controlling,
controlled by or under common control with VGI
and which is part of the same group of investment
companies as the Funds.
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]]>Agencies
[Federal Register Volume 72, Number 192 (Thursday, October 4, 2007)]
[Notices]
[Pages 56811-56813]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-19630]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-28007; 812-13426]
Van Eck Associates Corporation, et al.; Notice of Application
September 28, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application to amend a prior order under section 6(c)
of the Investment Company Act of 1940 (``Act'') for an exemption from
sections 2(a)(32), 5(a)(1), 22(d), 22(e) and 24(d) of the Act and rule
22c-1 under the Act, under section 12(d)(1)(J) of the Act for an
exemption from sections 12(d)(1)(A) and (B) of the Act, and under
sections 6(c) and 17(b) of the Act for an
[[Page 56812]]
exemption from sections 17(a)(1) and (a)(2) of the Act.
-----------------------------------------------------------------------
Summary of Application: Applicants request an order to amend a prior
order that permits: (a) Open-end management investment companies, whose
series are based on equity securities indices (``Equity Funds''), to
issue shares of limited redeemability (``Shares''); (b) secondary
market transactions in the Shares of the Equity Funds to occur at
negotiated prices; (c) dealers to sell Shares of Equity Funds to
purchasers in the secondary market unaccompanied by a prospectus when
prospectus delivery is not required by the Securities Act of 1933
(``Securities Act''); (d) certain affiliated persons of the Equity
Funds to deposit securities into, and receive securities from, the
Equity Funds in connection with the purchase and redemption of
aggregations of Shares; (e) certain registered management investment
companies and unit investment trusts outside of the same group of
investment companies as the Equity Funds to acquire Shares; and (f)
under certain circumstances, the Equity Funds that track certain
foreign equity securities indices to pay redemption proceeds more than
seven days after the tender of Shares (the ``Prior Order'').\1\
Applicants seek to amend the Prior Order in order to offer additional
series based on fixed income securities indices (the ``New Funds'' and
together with the Equity Funds, the ``Funds'').
---------------------------------------------------------------------------
\1\ Van Eck Associates Corporation, et al., Investment Company
Act Release Nos. 27283 (Apr. 7, 2006) (notice) and 27311 (May 2,
2006) (order), subsequently amended by Van Eck Associates
Corporation, et al., Investment Company Act Release Nos. 27694 (Jan.
31, 2007) (notice) and 27742 (Feb. 27, 2007) (order).
Applicants: Van Eck Associates Corporation (``Adviser''), Market
Vectors ETF Trust (``Trust''), and Van Eck Securities Corporation
---------------------------------------------------------------------------
(``Distributor'').
Filing Dates: The application was filed on September 25, 2007, and
amended on September 28, 2007.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on October 23, 2007, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090. Applicants, 99 Park Avenue, 8th
Floor, New York, NY 10016.
FOR FURTHER INFORMATION CONTACT: Julia Kim Gilmer, Branch Chief, or
Michael W. Mundt, Assistant Director, at (202) 551-6821 (Division of
Investment Management, Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Branch, 100 F Street, NE., Washington, DC
20549-0102 (tel. 202-551-5850).
Applicants' Representations
1. The Trust is an open-end management investment company
registered under the Act and organized as a Delaware statutory trust.
The Trust is organized as a series fund with multiple series. The
Adviser, an investment adviser registered under the Investment Advisers
Act of 1940 (``Advisers Act''), will serve as investment adviser to the
New Funds. The Adviser may retain sub-advisers (``Sub-Advisers'') to
manage the assets of a New Fund. Any Sub-Adviser will be registered
under the Advisers Act. The Distributor, a broker-dealer registered
under the Securities Exchange Act of 1934 (the ``Exchange Act''), will
serve as the principal underwriter and distributor of each New Fund's
Shares.
2. The Trust is currently permitted to offer Funds based on equity
securities indices in reliance on the Prior Order. Applicants seek to
amend the Prior Order to permit the Trust to offer the New Funds that,
except as described in the application, would operate in a manner
identical to the Equity Funds that are subject to the Prior Order.
3. Each New Fund will invest in fixed-income securities
(``Portfolio Securities'') selected to correspond generally to the
price and yield performance of a fixed income securities index
(``Underlying Index'').\2\ No entity that creates, compiles, sponsors,
or maintains an Underlying Index is or will be an affiliated person, as
defined in section 2(a)(3) of the Act, or an affiliated person of an
affiliated person, of the Trust, the Adviser, any Sub-Adviser, the
Distributor, or a promoter of a New Fund.
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\2\ The New Funds identified in the application would have as
their Underlying Indexes: the Lehman Brothers Short Managed Money
Municipal Index, Lehman Brothers Intermediate Managed Money
Municipal Index, Lehman Brothers Long Managed Money Municipal Index,
Lehman Brothers Non-Investment Grade Municipal Index, Lehman
Brothers Managed Money Municipal California Index, and the Lehman
Brothers Managed Money Municipal New York Index.
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4. The investment objective of each New Fund will be to provide
investment results that correspond, before expenses, generally to the
price and yield performance of the relevant Underlying Index. The
Adviser may fully replicate a New Fund's relevant Underlying Index or
use a representative sampling strategy where the New Fund will seek to
hold a representative sample of the component securities of the
Underlying Index.
5. Under the Prior Order, applicants stated that each Equity Fund
would invest at least 95% of its total assets in the component
securities of its underlying index and may invest up to 5% of its
assets in money market instruments, money market funds, futures
contracts, options, options on futures contracts, swap contracts, cash
and cash equivalents as well as in stocks not included in its
underlying index but which the Adviser believes will help the Equity
Fund track its underlying index. Applicants seek to amend the Prior
Order to provide that each Fund generally will invest at least 80% or
90% of its total assets, as disclosed in the relevant prospectus, in
the securities that comprise the relevant Underlying Index, and at
times may invest up to 20% of its total assets in certain futures,
options, and swap contracts, cash and cash equivalents, as well as
securities not included in its Underlying Index which the Adviser
believes will help the Fund track its Underlying Index. At all times, a
New Fund will hold, in the aggregate, at least 80% of its total assets
in component securities and investments that have economic
characteristics that are substantially identical to the economic
characteristics of the component securities of its Underlying Index.
Applicants expect that each New Fund will have a tracking error
relative to the performance of its respective Underlying Index of less
than 5 percent.
6. Applicants state that the New Funds will comply with the federal
securities laws in accepting a deposit of a portfolio of securities
designated by the Adviser to correspond generally to the price and
yield of the New Fund's Underlying Index (``Deposit
[[Page 56813]]
Securities'') \3\ and satisfying redemptions with portfolio securities
of the New Fund (``Fund Securities''), including that the Deposit
Securities and Fund Securities are sold in transactions that would be
exempt from registration under the Securities Act.\4\ The specified
Deposit Securities and Fund Securities generally will correspond pro
rata, to the extent practicable, to the Portfolio Securities of a New
Fund.
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\3\ Applicants state that a cash-in-lieu amount will replace any
``to-be-announced'' (``TBA'') transaction that is listed as a
Deposit Security or Fund Security of any New Fund. A TBA transaction
is a method of trading mortgage-backed securities where the buyer
and seller agree upon general trade parameters such as agency,
settlement date, par amount and price. The actual pools delivered
generally are determined two days prior to the settlement date. The
amount of substituted cash in the case of TBA transactions will be
equivalent to the value of the TBA transaction listed as a Deposit
Security or Fund Security.
\4\ In accepting Deposit Securities and satisfying redemptions
with Fund Securities that are restricted securities eligible for
resale pursuant to rule 144A under the Securities Act, the New Funds
will comply with the conditions of rule 144A, including in
satisfying redemptions with such rule 144A eligible restricted Fund
Securities. The prospectus for a New Fund will also state that an
authorized participant that is not a ``Qualified Institutional
Buyer'' as defined in rule 144A under the Securities Act, will not
be able to receive, as part of a redemption, restricted securities
eligible for resale under rule 144A.
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7. Applicants state that the New Funds will operate in a manner
identical to the operation of the existing Funds in the Prior Order,
except as specifically noted by applicants (and summarized in this
notice). The New Funds will comply with the terms and provisions of the
Prior Order except as modified by this application. Applicants agree
that any amended order granting the requested relief will be subject to
the same conditions as those imposed by the Prior Order. Applicants
believe that the requested relief continues to meet the necessary
exemptive standards.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-19630 Filed 10-3-07; 8:45 am]
BILLING CODE 8011-01-P
